Statement–Argument — Should salaries and perquisites in Public Sector Undertakings (PSUs) be made equivalent to those in the private sector? Arguments: I. Yes. Pay parity will help PSUs attract and retain competent talent. II. No. PSUs cannot afford private-sector–level compensation. III. Yes. Without competitive pay, PSUs will struggle to compete effectively with private firms.

Introduction / Context:
Compensation strategy in PSUs must balance fiscal prudence with capability-building. The policy question is whether PSU pay should match private-sector levels to ensure competitiveness and service quality.

Given Data / Assumptions:

• PSUs compete with private firms for specialised skills (engineering, digital, operations, finance).
• Labour markets are dynamic; pay influences attraction and retention.
• Budget constraints exist but can be managed via productivity-linked structures.

Concept / Approach:
Arguments are strong when they align compensation policy to organisational performance. I and III connect parity to tangible outcomes (talent and competitiveness). II is a feasibility claim but not a decisive policy rationale—affordability depends on design (bands, variable pay, benchmarking) and productivity gains.

Step-by-Step Solution:
1) Assess I: Talent markets clear on pay. Without competitive offers, PSUs may face shortages or high churn. Strong.2) Assess II: “Cannot afford” is a blanket assertion lacking context; phased parity, role-specific benchmarking, or variable incentives can align cost with value. Weak.3) Assess III: Links pay to competitive effectiveness—better hiring tends to improve delivery, innovation, and financial results. Strong.

Verification / Alternative check:
Many reforms use graded parity, performance pay, and governance changes—consistent with I and III while addressing the concern in II.

Why Other Options Are Wrong:
“Only I/Only III” omit the complementary rationale; “None” ignores market dynamics; “Only II” treats feasibility as a fixed constraint rather than a design problem.

Common Pitfalls:
Assuming parity implies blanket raises across all roles; ignoring variable/targeted structures.

Final Answer:
I and III are strong.